![]() ![]() “This broadens the horizon a bit to this idea of the democratization of finance,” Compiani says. Members of this group invested more than their seasoned counterparts and were potentially exposed to greater losses on the downside, raising questions about how to warn investors of the risks. This group-including younger, less-educated, and lower-income investors-was responsible for about 38 percent of the price appreciation during a boom in Bitcoin prices in December 2017, the research shows. The researchers analyzed three surveys of more than 30,000 Bitcoin investors between 20 as the digital token characteristically soared and plunged: the Survey of Consumer Payment Choice by the Federal Reserve Bank of Atlanta the mobile-banking report from the 2018 ING International Survey and a survey by an anonymous US-based trading platform with global customers.īenetton and Compiani find that the enthusiasm of newer crypto investors tends to drive values up. After all, the digital tokens have no future earnings or cash flows and they aren’t even “real” currencies, lacking the backing of any major central bank. On the premise that beliefs play an important role in determining economic outcomes, the researchers set out to understand what people are thinking when they invest in cryptocurrencies. These price surges are driven in significant part by optimistic, newer investors-many of whom are younger than average and have lower incomes and fewer assets, find University of California at Berkeley’s Matteo Benetton and Chicago Booth’s Giovanni Compiani. Wild overnight swings are common, driven by everything from the musings of Elon Musk to the actions of regulators. The cryptocurrency hit a record high of more than $63,000 in April 2021, before quickly plummeting to less than $30,000. ![]()
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